Tuesday, 27 May 2014

Radical right-wing parties have emerged as the main winners of the 2014 European Parliament elections. UKIP beat both its Labour and Conservative rivals in the UK, while in France the Front National topped the polls with 25 per cent and 25 MEPs. Radical right-wing parties came third in Austria, second in Hungary, and third in Greece, where the neo-Nazi Golden Dawn emerged as the third party with just over 9 per cent.

Front National's Gains (France)

The Front National's victory in last Sunday’s election had been forewarned by most opinion polls, but the margin of victory over the UMP belied the commentaries that thought it would be a close race. The win builds upon the dress rehearsal of March’s municipal elections, where it was clear that the party had finally learnt how to target its resources and maximise electoral returns. Marine Le Pen and the party politburo have established the national presence that had escaped it for its previous 42 years.

With proportional election voting for MEPs in Brussels, rather than local government, an historically unpopular president, and an opposition still weakened from its post-incumbency in-fighting, the Front National’s momentum was always likely to see it exceed 20 per cent. But the critical threshold of defeating the UMP and François Hollande’s Socialist Party has finally been stepped over, demonstrating to the electorate that the party is now an equal player across the whole nation, and no longer merely a ‘nuisance’ to the mainstream with some local pockets of support.

The other parties have already portrayed this as the fault of an unpopular government, economic crisis and a ‘distant’ Europe. The FN, however, will argue that its support is a positive endorsement of its policies and leadership. With the size of support, as well as its consistency since Marine Le Pen’s presidential performance in 2012, this will be a difficult argument to counter. Unsurprisingly, there is already talk of a Right-Far Right run-off in the 2017 presidentials. With another three years until that race, the FN’s capacity to disrupt politics at home as well as in the European hemicycle is significant.

UKIP's Gains (United Kingdom)

The gains made by UKIP in the recent local and European elections in the UK have been subjected to considerable attention, with an apparent consensus that those most attracted to UKIP are white, working class men of advanced years, those ‘left behind’ by social changes which range from deindustrialisation to gay marriage.

No doubt this is true, but with it comes the problem of how to counter UKIP, how to reject emphatically its politics without demonising its supporters and without allowing Farage any of those moments of recognition and solidarity that underlie political allegiance.

Three suggestions: the first is to assume that all voters ( and not just those opposed to Farage) are thinking people and thus repudiate and demonstrate the absurdity of all Farage’s policies.
Second, do not exhibit any sympathy for the idea that Farage represents ‘ordinary’ people or even worse the ‘little man’. Third, and finally, take this former point further and make it plain that the most humanly sympathetic and creative communities (be they institutions or towns and cities) are those accepting of difference. Make it, in short, clear that Farage’s world is an authoritarian fantasy.

AfD's Ascendacy ( Germany)

Following a ruling by the Federal Constitutional Court late in February, the 2014 European election was Germany’s first contest without a nationwide five per cent threshold since 1949. As a consequence, seven very small parties, including Germany’s oldest extreme right party, the National Democratic Party of Germany (NPD), have won a seat in the EP. While this is hardly game changing for the NPD, having a sitting MEP could provide an interesting twist if an attempted ban of the party in Germany goes ahead and they try to appeal that ruling in Strasbourg.

Otherwise, the result was broadly in line with expectations. Confirming their current marginal role, the Free Democrats (FDP), for decades the king makers in German Politics, lost roughly two thirds of their support and would not have been represented at all under the previous electoral system.

The most interesting development in Germany is the ascendancy of the Eurosceptic Alternative für Deutschland (AfD). The party, which was founded only a year ago, garnered seven per cent of the vote. While this pales in comparison to the results of other Eurosceptics, it is nonetheless the biggest national success for an outsider party since the late 1980s. Having seven freshly elected MEPs will provide a moral, political and financial boost for the party in the state elections that will be held in three of the Eastern states in August/September.

Analysis

Why is this occurring? Let’s take, as a point of departure, Cas Mudde’s analysis. He has identified three major strands in mass attitudes which predispose people to vote for the radical right: nativism – that is, a belief that holds that only indigenous inhabitants should have full civic and social rights – authoritarianism, and populism which counter-poses the ordinary people against the ‘elite’, the political class, the liberal intelligentsia. This, combined, constitutes what the cultural theorist Stuart Hall called ‘authoritarian populism.’

In his theory of ‘pathological normalcy’ Mudde contends that authoritarian populism, far from being confined to the margins, is deeply embedded within the mainstream. Two factors, one can argue, have propelled it into the forefront of political consciousness. The first is the rising salience, and emotional voltage of anti-immigrant feeling, that is to say mounting antipathy, resentment and apprehension towards those – whether they be recent immigrants, asylum-seekers or established ethnic minorities – who constitute ‘the other’.

The second is, of course, the impact of the financial crash and the economic recession. The effect of this has not been (in the UK or in a majority of other European countries) a tilt to the left. Left-wing diagnoses, at least in the UK, have had little purchase: there is only a muted sense that the gyrations of the financial system are in any way responsible for what went wrong. Most people, one suspects, are left baffled by talk of sub-prime mortgages, derivatives and credit default swaps. They are looking for something more tangible to blame: if not Gordon Brown then welfare recipients and, of course, immigrants.

The implication of all this is disturbing for left-of-centre parties. Research for some while has indicated that authoritarian populism appeals in particular to the more poorly-educated, to manual workers and to routine clerical workers: the natural constituency of the left. What we are witnessing is, in a sense, a reconstitution of a form of class politics.

What's Next

EU leaders are meeting for dinner in Brussels today to discuss reforms of the 28-nation bloc in the wake of successes for euro-sceptic parties across the continent Right-of-centre anti-immigration parties topped the polls in the UK, France and Denmark, while the extreme-left Syriza movement took top spot in Greece, the euro-sceptic Five Star movement in Italy and the anti-euro Alternatives in Germany. The turnout and results in the European Parliament elections have underlined the need for reform to ensure that the EU is doing more to deliver what voters care about: jobs, growth and a better future.

Indeed the EU’s policy agenda for the next year or two includes several very tricky issues which will test the ability of the EU’s institutions to arrive at viable and satisfactory solutions. In particular, the reforms of economic governance in response to the euro crisis remain incomplete and will require difficult decisions about the underlying policy stance, burden-sharing among Member States, and the balance of power between the supranational and national levels.

Many of the recent and prospective initiatives in this area, such as mutualisation of debt or the creation of additional fiscal capacities and powers to help with macroeconomic stabilisation, will deepen integration at a time when voters seems to want the opposite.

At first sight, therefore, the new European Parliament looks like a recipe for gridlock in decision-making. Not only is the traditional left-right division now overlaid by a more unpredictable division between Europhiles and Euro-sceptics, but a clear message has also been sent to the elites that business as usual is no longer acceptable.

Yet a more subtle interpretation could be that the procrastination and squabbling over second-order concerns cannot continue and that all the institutions need to look for more comprehensive and coherent solutions. Despite the headlines about Euro-scepticism, the voice of those worst affected by the crisis is now louder. Could it be that a more sanguine reading of these electoral results is warranted?

Friday, 23 May 2014

South Africa’s fifth national and provincial elections were held on May 7, just after the 20th anniversary of the country’s first democratic elections and six months after Nelson Mandela’s death. The outcome bore a strong resemblance to that of the 2009 election: The African National Congress (ANC) secured more than 60 percent of the vote; the main opposition grew nationally and retained its provincial stronghold; and a newcomer on the political scene finished third with almost 7 percent of the vote.

Those born after the end of apartheid in 1994 were able to cast their ballots for the first time, although only a third of those entitled to do so had registered to vote. An ANC victory would return President Jacob Zuma for a second five-year term. He was dogged by allegations of corruption in the build-up to the election after an independent inquiry found he had "unduly benefited" from an expensive government-funded upgrade to his private residence.

Dissatisfaction with the government has been growing over high levels of unemployment, a lack of basic services and allegations of widespread corruption. the ANC is likely to use its impressive mandate to try to drive through its National Development Plan - rejecting nationalisation, and emphasising investment and infrastructure. The business-friendly plan has alarmed South Africa's powerful unions - some of which may soon break away to form their own party.

It might be tempting to conclude that in South Africa the more things change, the more they stay the same. But the national polls, and electoral outcomes in South Africa’s nine provinces, reveal subtler shifts and trends that cast the election in a rather different light and raise important questions about the ANC’s future as a dominant party. Would the ANC be able to deliver its promises and maintain its legitimacy? Would President Zuma and the ANC leadership be able to address the big issues that sickening South Africa today?

The ANC wasn’t just elected into government in 1994. It reclaimed the freedom and self-determination of all people by means of a struggle that was long, bloody, dehumanizing, humiliating and towards the ends, fairly clever. On a continent where democracy is largely just another corrupt form of failed governance, the ANC is the party that won the struggle, thereby becoming the natural leader of the nation.

But the power the ANC holds in its current form is neither saturated nor guaranteed. Its leadership is not carved in stone. The massive power struggles within the party are the truest form of political rivalry and need to be given more attention. The prevalent whining about the definition of a “true democracy“ and the size and relevance of the opposition also misses the point. The government is not accountable to its opposition. It is accountable to its people.

Many things have improved in South Africa since 1994, to be sure. State racism has ended, and the country now boasts what many describe as the most progressive constitution in the world. People have rights, and there are institutions designed to protect and uphold those rights. Still, everyday life for most South Africans remains a struggle – a struggle that is infinitely compounded by the sense of disappointment that accompanies it, given the gap between the expectations of liberation and the state of abjection that the majority continues to inhabit.

South Africa’s unemployment rate in 1994 was 13 percent – so bad that most were convinced it could not get worse. Yet today it is double that, at more than 25 percent. Add all the people who have given up searching for work, and the figure is closer to 37 percent. The situation is particularly bad for young people. The Economist recently reported that “half of South Africans under 24 looking for work have none. Of those who have jobs, a third earn less than $2 a day.”

Besides its dismal record on employment, South Africa also boasts a reputation for being one of the most unequal countries in the world. Not only has aggregate income inequality worsened since the end of apartheid, income inequality between racial groups has worsened as well.

According to the 2011 census, black households earn only 16 percent of that which white households earn. About 62 percent of all black people live below the poverty line, while in the rural areas of the former homelands this figure rises to a shocking 79 percent. In 2006, 70 percent of South Africa’s land was still under the control of whites, who constitute a mere 10 percent of the population. The ANC’s Black Economic Empowerment programme has succeeded in minting new black millionaires (South Africa has 7,800 of them now), but cannot seem to manage the much more basic goal of eliminating poverty.

How could things have gone so wrong? Much of it has to do with what happened during the negotiated transition of the 1980s and early 1990s. The apartheid National Party was determined to ensure that the transition would not undermine key corporate interests in South Africa, specifically finance and mining. They were willing to bargain away political power so long as they could retain control over the economy. And so they did. The ANC was forced to retreat from its position on nationalisation, and an IMF deal signed just before the transition deregulated the financial sector and clamped down on wage increases. The central bank, left in the hands of the old apartheid bosses, was insulated from democratic politics and its mandate limited to targeting inflation instead of employment or growth.

The National Party only managed to extract these concessions because they had successfully divided the resistance movement between moderate elites, such as Thabo Mbeki, who had spent many years in exile, and the more radical activists who were at the forefront of the struggle within South Africa itself. The latter were largely unrepresented in the economic negotiations, while the former enjoyed a sort of royal treatment, including a now infamous series of secret meetings in the United Kingdom with major figures in mining and finance.

Mbeki, a self-proclaimed Thatcherite, was easy to convince. He already believed in the basic neoliberal principles that the National Party were hoping to instantiate. For him, the route to prosperity for the new nation depended not on nationalisation and redistribution, but on “free trade” and foreign investment, which would supposedly grow the economy and trickle down to the poor.

Still, when the ANC assumed power in 1994 it implemented a progressive policy initiative known as the Reconstruction and Development Programme (RDP). The RDP was designed to promote equitable development and poverty reduction, mostly through public investment and the mass rollout of social services to connect millions of people to housing, electricity, water, and clinics.

Despite its successes, this policy framework was abandoned a mere two years later. Mbeki and then Finance Minister Trevor Manuel held clandestine discussions with World Bank advisors toward drafting a new economic policy known as GEAR (Growth, Employment, and Redistribution, even though it accomplished precious little of the latter). It was implemented in 1996 despite significant resistance from within the ranks of the unions that had given such force to the anti-apartheid struggle. Known by its detractors as the “1996 class project”, GEAR amounted to a sort of neoliberal shock therapy: more privatisation, lower trade barriers, and looser financial controls.

When the ANC came to power with a landslide vote in 1994, they did so on the promises of the Freedom Charter. Penned in 1955, the Freedom Charter expressed South Africans’ demands for the right to work, housing, freedom of movement, and – most radically – economic justice. “The national wealth of our country, the heritage of South Africans, shall be restored to the people,” the Charter reads. “The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole, [and] all other industry and trade shall be controlled to assist the wellbeing of the people.”

Most South Africans agree that these promises have been horribly betrayed. South Africa’s mineral wealth, including some of the richest seams of gold, platinum, and coal in the world, remain in the hands of corporations such as British-owned Anglo American. The finance sector, which has ballooned to a dangerously large 21 percent of the country’s GDP, remains mostly monopolised by four white-owned conglomerates.

Given these contradictions, it is no wonder that South Africa is ablaze with discontent, earning it the title of “protest capital of the world”. It seems that every year authorities report that the number of protests has reached the highest levels since the end of apartheid. And, indeed, the figures are staggering: early this year some 3,000 protests occurred over a 90 day period, involving more than a million people. South Africans are taking to the streets as they give up on electoral politics. This is particularly true for the young: Nearly 75 percent of voters aged 20-29 did not participate in the 2011 local elections.

The government’s response has been a mix of police repression – including the recent massacre of 34 striking miners at Marikana – and the continued rollout of welfare grants, which now reach more than 15 million people. The grants are a stop-gap solution to the failure of trickle-down economics, a way of papering over the contradictions of South African capitalism; everyone is aware that without them poverty and inequality would be so unbearable that the country’s already tenuous sense of social stability would come crashing to an end.

So far the protests have been focused on issues like access to housing, water, electricity, and other basic services, but it won’t be long before they coalesce into something much more powerful, as they did during the last decade of apartheid. There are already signs that this is beginning to happen. The Economic Freedom Fighters, recently founded by Julius Malema, the unsavoury former leader of the ANC Youth League, is successfully mobilising discontented youth and making a strong push to nationalise the mines and the banks. On a more interesting front, NUMSA, the metal workers union, recently broke ranks with the ANC in an historic turn that could open the way for a labour-based opposition to the ruling party for the first time since 1994.

It seems that the ANC’s legitimacy is beginning to unravel and consent among the governed has begun to thin. It is still too early to tell, but the death of Mandela may further widen this crack in the edifice of the ruling regime, as the ANC scrambles to shore up its symbolic connection to the liberation struggle.

In short, the situation in South Africa over the past 20 years opens up interesting questions about the meaning of democracy. What is democracy if it doesn’t allow people to determine their own economic destiny or benefit from the vast wealth of the commons? What is freedom if it serves only the capital interests of the country’s elite? The revolution that brought the end of apartheid has accomplished a great deal, to be sure, but it has not yet reached its goal. Liberation is not yet at hand.

Thursday, 22 May 2014

Egypt's presidential elections will take place on May 26 and 27. The results are expected by 5 June, and if a second round is necessary it will be held by mid-month, with results announced no later than 26 June. Only two candidates, Hamdeen Sabahi and Abdel Fattah el Sisi, are submitted to the Supreme Election Committee, which obviates the need for a run-off.

Hamdeen Sabahi is a former presidential candidate in the 2012 presidential election, officially announced his presidential bid on 8 February 2014 and Abdel Fattah el-Sisi is a former Army chief.

One of the toughest challenges facing Egypt’s next president will be the troubling state of the country’s economy. Answers to the questions of where to start, what to do, and how to do it are all critical for success or failure in this regard. But two economic issues in particular will be most challenging for him: restoring the country’s macroeconomic stability and meeting the needs of the Egyptian people for jobs and better living conditions.

Egypt is currently in a state of fiscal lassitude. For three years now, fiscal deficit and public debt have been soaring, approaching, respectively, 14 percent and over 100 percent of gross domestic product (GDP). Continued domestic borrowing to finance the growing deficit has increasingly exposed the banking sector to government debt, crowded out private investment, and resulted in sluggish economic growth that—at an average of 2 percent a year—was barely above the population growth of 1.7 percent.

Declining dollar receipts from tourism and foreign investment created balance of payment difficulties that depleted international reserves and weakened national currency. These imbalances ultimately led to higher unemployment and inflation rates, and stagnant per capita income.

Three times since January 2011, Egypt attempted to negotiate an agreement with the International Monetary Fund (IMF) to stabilize its battered economy, only to suspend talks before they come to fruition, mostly for fear of what an IMF-supported program could do to an already fragile socio-political domestic setting.

Gulf aid disbursed after the ouster of the Islamist President Mohamed Morsi from power last summer provided much-needed short-term financial respite. But this generous lifeline, however, is not expected to last for long.

As things stand at present, the country’s macroeconomic picture is a bleak one, and absent urgent reform measures, Egypt’s fiscal health could get much worse, as projected by the IMF and by the country’s own Ministry of Finance. Egypt may find itself in need of the IMF again for the Fund’s money and its technical expertise, and for the international financing that could come after an agreement is signed. The future leadership of Egypt has to decide how soon this will happen, under what terms, and at what social cost.

Dealing with the country’s widespread poverty and high levels of youth unemployment represent equally pressing issues awaiting the new president of Egypt. These two socially explosive problems were among the main forces that ignited the popular revolt against Mubarak regime in early 2011, and both have worsened over the past three years.

Over a quarter of the Egyptian population (26.3 percent) lives under the poverty line of 2 dollars a day, with another quarter hovering just above the line. Government policies that for decades provided social protection for the poor—through generalized subsidies for food and public utilities; free education and health services; and low cost housing—have all proven, over time, to be costly and inefficient.

More importantly, these subsidies are no longer fiscally affordable. Worse still, high economic growth rates during a good part of the last decade of Mubarak’s rule, an average of 6 percent a year, not only failed to “trickle down” and lift people out of destitution, but were in fact associated with a rise in the country’s poverty (from 16.7 percent in 2000 to 25.2 percent in 2011). Thus Mubarak-era policies increased the poor’s dependence on government assistance for survival and further squeezed the state budget.

With poverty so prevalent and effective social safety nets lacking, the challenge facing Egypt’s next president will be how to restore the country’s macroeconomic balance (which would necessarily entail some sort of austerity measures) without setting off unrest in the streets if such measures were perceived, rightly or wrongly, by the Egyptian poor as adding more hardship to their already strained daily lives.

High levels of youth unemployment will represent another serious challenge for the new president. General unemployment in Egypt currently stands at 13.4 percent; nearly 70 percent of the unemployed are between 15 and 29 years, and over 80 percent are educated. Each year, over seven hundred thousand young Egyptians enter the job market for the first time, thus adding to the severity of the problem.

With an already bloated government sector that no longer guarantees automatic employment for college graduates (a state policy that was in place from the 1960s to 1990s) and a non-dynamic private sector that increasingly operates under a highly problematic business environment, the only option left for most Egyptian youth seeking employment is in the informal sector, where jobs are largely characterized by low pay and low quality, with no work benefits and no prospects for career growth.

The socio-political ramifications of continued youth exclusion from the formal economy could prolong the current state of instability in the country. Therefore, policies and programs to generate short-term employment for youth acquire a sense of urgency. Creating productive and sustainable jobs in the medium- and long-term, however, will require a firm political commitment from Egypt’s new leadership to embark on structural reforms needed to create a level-playing-field business environment and to unlock the potential of the private sector.

The newly elected president will be challenged to undertake these reforms in the presence of vested-interest and politically connected business groups that may either resist reforms or, if and when implemented, make sure to benefit from them to the exclusion of others.

These are the most formidable economic issues that will face the new president of Egypt upon taking office early next month. Tackling them will not be easy, but it is not impossible either. At the present time, there is a strong belief among the country’s policy makers, and outside the government as well, that fiscal reforms (mainly energy subsidy reforms, along with broadening the tax base) are the only way out of Egypt’s mounting economic troubles.

International observers also warn of potential crises ahead if such reform measures were to be delayed. With reforms implemented, all other things being equal, the economy is projected by the IMF to grow between 4 to 4.5 percent a year; perhaps not adequate to make a significant dent in poverty and youth unemployment, but enough to put the economy on the road to recovery.

A word of caution, however, is in order here. Experience in the Arab region and elsewhere has shown that how growth is realized, and where it comes from, are as important as, if not more so than, the economic growth figures themselves. After all, high growth rates do not necessarily translate automatically into extra income for the poor or more jobs for the unemployed. That was the unmistakable lesson of the “fast growth model” Egypt followed during the last decade of Mubarak’s presidency.

The next president of Egypt, therefore, will be highly advised to keep this important policy lesson in mind when searching for the right economic growth strategy to address the serious challenges facing his country.

Wednesday, 21 May 2014

In an unprecedented move, the U.S. Justice Department has charged five officers in the People’s Liberation Army (PLA) with crimes related to cyber espionage. A grand jury in Pittsburgh, Pennsylvania has indicted five Chinese military hackers for computer hacking, economic espionage and other offenses directed at six American victims in the U.S. nuclear power, metals and solar products industries.

China’s Foreign Ministry released a statement condemning the charges as grossly violating the basic norms governing international relations. China demanded that the U.S. withdraw the charges. “The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets. The U.S. accusation against Chinese personnel is purely ungrounded and absurd,” the statement said. In response, Beijing has suspended the U.S.-China Cyber Working Group, a dialogue platform for cyber issues.

Chinese state media labelled the United States a mincing rascal and high-level hooligan on Wednesday in response to Washington charging five Chinese military officers with hacking U.S. companies to steal trade secrets.

The defendants are identified as Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, all officers in the PLA’s Unit 61398. The victims are Westinghouse Electric Co; U.S. subsidiaries of SolarWorld AG; U.S. Steel; Allegheny Technologies Inc. (ATI); the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW); and Alcoa Inc.

The charges were the first ever to be filed against known state actors for infiltrating U.S. commercial targets by cyber means. They were also the first criminal hacking charge the U.S. has filed against specific foreign officials, and follows a rise in public criticism and private confrontation between the world's two biggest economies over cyber espionage. For the U.S. Attorney General the case “should serve as a wake-up call to the seriousness of the ongoing cyber-threat. These criminal charges represent a groundbreaking step forward in addressing that threat.”

The U.S. Attorney General provided specific examples of how the alleged hacking worked. While Westinghouse was in the midst of negotiations with a Chinese state-owned enterprise over constructing nuclear power plants, the hackers stole trade secret designs for components of those plants. The hackers also stole cost, pricing, and strategy information from SolarWorld at the same time that Chinese competitors were driving SolarWorld out of the Chinese market.

The Obama administration has been emphasizing cyber espionage as an issue in U.S.-China relations since early 2013, when a series of public reports of Chinese hacking appeared. However, this is the first time that the U.S. government has proved specific details on allegations of Chinese hacking, including names, dates, and the type of information stolen. This may be the first such case, but it apparently won’t be the last.

Furthermore, a new industry report says that the Chinese government has expanded the
scope of its cyber espionage despite the greater public scrutiny these
operations received in 2013. The new report was published by Mandiant, now part of FireEye, the same
company that in February 2013 published the much discussed APT1 report directly linking a unit of the People’s Liberation
Army to a massive cyber espionage campaign against foreign businesses. APT1 was
the hacking unit the report profiled.

The APT1 report was one of a number of very public exposures of China’s cyber
operations in 2013. Others included the New York Times its website had been revealing repeatedly targeted by China-based hackers (a unit
called APT-12) after the newspaper published an article tracing the massive
wealth senior Chinese leaders accumulated while in power.

The Mandiant and New York Times’ reports led the Obama
administration to raise the profile of cyber issues in U.S.-China relations, an
effort that was partially undercut by the subsequent Edward Snowden leaks. The U.S.
Defense Department also began more openly discussing Chinese cyber operationsagainst the U.S. military
and defense industrial base.

In its new annual report, M-trends, Mandiant explains that the “release of the
APT1 report in February 2013 provided a unique opportunity to observe whether
revelations of China’s state-sponsored cyber activity could spur a diplomatic
solution to the problem of nation-state cyber espionage on behalf of private
sector entities. The decision to go public and charge specific Chinese individuals with crimes suggests that Obama feels diplomacy with China is not making sufficient progress on this issue. Cyber-security and cyber espionage have been raised repeatedly at high-level meetings.

Indeed, the Chinese government is expanding the scope of its cyber operations, and China-based advanced threat actors are keen to acquire data about how business operate--not just about how they make their products. Instead of simply targeting intellectual property, the suspected state-run Chinese hackers are now trying to steal information about how these business work and how executives and key figures make decisions.

Examples of the kind of data the Chinese hackers are now targeting include:
executive emails, business processes, negotiations plans, budgetary
information, organizational charts, meeting minutes, human resources records,
and programs and initiatives. The expansion beyond stealing just intellectual
property comes at a time when the Chinese government is hoping to make their
large state-owned enterprises run more efficiently, which this type of data
would facilitate.

The charges are sure to create a major backlash in China, which has always denied any involvement in hacking activities. Beijing will undoubtedly point to U.S. cyber espionage activities as evidence of U.S. hypocrisy. Documents leaked by former NSA contractor Edward Snowden revealed hacking by the National Security Agency into universities and businesses in Hong Kong and mainland China, including extensive hacking into telecommunications giant Huawei. Beijing might seek to retaliate by bringing its own charges against the NSA or other U.S. agencies for their hacking activities. China’s Foreign Ministry has already demanded an explanation for the U.S. hacking activities, a call it renewed after the indictment of the PLA officers.

The case against the PLA officers is unlikely to move forward, as there’s no chance China will extradite the accused to the U.S. for prosecution. It’s mostly a symbolic move, then, designed to demonstrate Washington’s strong dissatisfaction with China’s hacking activities. It also signals that the U.S. does have concrete evidence of Chinese hacking, evidence Beijing has always insisted on seeing.

Friday, 16 May 2014

A vicious cycle of instability and military coups, fuelled by ethnic rivalries and private quarrels, has ensured that no elected president has reached the end of his mandate during 40 years of independence in Guinea-Bissau. A military coup in 2012 ousted Prime Minister Carlos Gomes Junior, the front-runner in the presidential race after a period of political stability and economic improvements.

That coup interrupted the presidential election process which was delayed for a year. The country has been under a transitional government since then in a compromise set up by the military, which led the coup, and the Economic Community of West African States (ECOWAS). The economic situation deteriorated quickly with empty state coffers and wages unpaid. This had a major impact in a country of 1.7 million people and development was also compromised by political instability and a lack of accountability.

Guinea-Bissau is one of the poorest in Africa and ranked 176th out of the 185 countries surveyed in the 2013 Human Development Index. Guinea-Bissau is home to 1.6 million people and covers about 10,800 square miles with weak state institution, dozens of remote islands and a jagged coastline of mangrove creeks have made it a paradise for smugglers.

About 80 percent of the population depends on cashew farming, but post-election stability could help attract investors to untapped mineral resources including bauxite, phosphate and offshore oil. Some 110 million euros in European Union aid, frozen after 2011 military uprising, could be unblocked too.

The landslide victory of the African Party for the Independence of Guinea and Cape Verde (PAIGC), in the April 13, 2014, presidential and parliamentary elections, is a clear sign that voters in Guinea-Bissau are craving political change, and no longer recognise the army’s legitimacy - or ability - to rule the country. Voter turnout was above 80 per cent, the highest in the country`s history, and both national and international observers describe the electoral process as having been free and fair.

The historical PAIGC won the legislative elections with an absolute majority, while its nominee Jose Mario Vaz leads the presidential race in the next round on May 18 when the presidential run-off election takes place.

Vaz's candidacy is also tainted by accusations from Bissau's attorney general of involvement in the embezzlement of a $ 12.5 million grant from Angola, something Vaz denies. He faces Nuno Gomes Nabiam, an independent candidate, after no one secured a majority in the first round. However, stability in Guinea-Bissau depends on more than electoral results.

The main challenge concerning Guinea-Bissau’s stability in the near future is the delayed reform of the security sector. The country needs smaller, professional security forces which are under effective civilian control. Its armed forces, totalling 4,500 men, are under the command of Antonio Indjai, the army`s chief of staff.

Most of these former combatants have benefited from instability and organised crime. Military intervention in Mali has reduced drugs and arms trafficking in the region and Guinea-Bissau’s general elections have left the military with few political allies.

There is also pressure for reform in the security sector from regional and international players like the Economic Community of West African States (CEDAO), the United Nations, Nigeria and Portugal.
PAIGC leader Domingos Simoes Pereira, former Secretary General of the Community of Portuguese Speaking Countries (CPLP) and Guinea Bissau’s next Prime Minister, is open to the creation of an inclusive government, including a sort of power-sharing agreement with the Party for Social Renewal, which is seen as close to the military elite.

He is also willing to nominate a Balanta to the post of army chief to replace Antonio Indjai. The UN Special Representative and Head of the United Nations Integrated Peace-building Office in Guinea-Bissau, Jose Ramos Horta, is also committed to finding a solution which would not be opposed by the military.

An outstanding international arrest warrant against Antonio Indjai, over claims of direct involvement in drug trafficking and illicit timber exploitation, remains a further challenge. The warrant leaves Antonio Indjai in a tough position as removal from his role as army chief would see him lose his position and material benefits, but could also cost him his freedom.

Thursday, 15 May 2014

In Ethiopia, Muslim leaders are facing an unjust trial for crimes they did not commit. A high profile trial against protest leaders – intellectuals, journalists, activists and elected members of “The Ethiopian Muslim Arbitration Committee” – is shaking the Ethiopian political landscape. The government argues that the accused harbour “extreme” Islamic ideologies. It accuses them of conspiracy with terrorist groups to overthrow the government and establish an Islamic state in Ethiopia.

The accused have professed their innocence and denied the charges. In the courtroom, they present the prosecution’s case as the continuation of repression by legal means, which resembles the totalitarian perversion of truth and justice of Stalinist and Apartheid regimes.

While letting the legal process take its course, the accused are exposing the agonising and ultimately insoluble contradiction between the government and its laws. They protest the complicity of the court in the ultimate travesty, daring to speak truth to power, a la Daniel Berrigan: “You cannot set up a court in the kingdom of the blind, to condemn those who see, a court presided over by those who would pluck out the eyes of men and call it rehabilitation.”
In December 2011, Muslim activists began a peaceful protest against what they saw as a coercive imposition of a little known sect of Islam called al-Ahbash and its teachings on Ethiopian Muslims and their leaders.

In the following months, protesters elected a 17-member “Arbitration Committee” to lead the protest. This protest was unique in many ways: It was innovative and playful. It was a renegade movement that refused to be threatened by prosecution or persecution and appealed to ideals and values more profound than “crime and punishment”.

After months of intrigues, negotiations, and all manners of malicious turns and twists, the government brought its fight against the community into the courtroom. By picking one of the most explosive charges available, the government transformed the political act of protest into a criminal act of terrorism. By criminalising people’s cries for dignity and justice, by twisting their dissent and moral objection into a shocking security threat, the indictment transforms the proclamation of dissent into an act of terror.
A criminal trial “is an indictment of individual behaviour”. The trial expresses and represents the normative idea of “calling to account”. It marks a moment at which a body-politic calls one or more of its members to account for a violation of its norms. In “calling to account” the body politic names the accused as a party to a dispute. This act of naming signifies something central to the legitimacy of the trial: It gives the accused a “speaking position”. The accused should be entitled to give an account of themselves and the dispute in which they are named; the right to contest the allegation.

The notion of “calling to account” imposes a great responsibility. It means that the government must treat the suspects as responsible moral agents, and must allow them “a voice in the interpretation of those norms“. The accusers must submit themselves to the same rules they apply to the accused – even more so when the accused is a public adversary. In a proper trial, “those who conduct the trial are also on trial themselves”.

This trial, however, is the complete negation of these principles. In fact, it is the most outrageous fraud imaginable. It is a fraud that best represents the vile baseness and moral bankruptcy of those in power who use the authority of the law and the devices of justice to mute peoples’ cries for truth and dignity.

In the course of this trial, the government trampled on every facet of their fair trial rights, including their right to presumption of innocence, the right to open and public trial, the right to examine witnesses and contest evidence. It produced and broadcasted a fictitious thriller movie – Jihadawi Harekat – complete with tortured confessions, hearsays, and a nest of vile gossips – all in the name of fighting terrorism.

This, then, is not a trial aimed at revealing truth and determining guilt or innocence. It is a hostile act, an individualised act of war designed to extend the state’s power of prosecution and punishment beyond legal limit. To be sure, it is an authentic show trial designed to squash dignity and crush collective resistance to this revolting crime.

For the accused, this is a trial of conscience – the purely moral act of dissent against the regime’s outrageous attempt to convert the entire community into a new religious sect. As defendants in a show trial, they know that they could not be found innocent without the government being guilty and they insist on using the moment of the trial to proclaim, defend, and espouse those notions and ideas that compelled them to act in the face of jail and torture; to expose the indelible filth that sullied the Ethiopian justice system.

They want to assume the role of prosecutor and judge, and communicate this sorry state of affairs to the public gallery – a strategy reminiscent of black liberationist movements of the last century. They insisted that their trial be held in the Millennium Hall, the largest hall in Addis Ababa, so that they would turn the event into a “repertoire of resistance”.

While they expect neither mercy nor decency from the court, they know that the spectre of its violence will continue to unsettle it from within and precipitate its normative renewal. As two of the prisoners, Abubaker Ahmed and Ahmedin Jebel, told the court, “We stand before the court not because we expect justice but because we wanted to bear witness to history.”

They know that law produces a determinate effect but its meaning and content cannot be exhausted in one single determination. They may be found guilty and condemned but they know that the conscientious subject is not totally exhausted or absorbed in this single condemnation. They know that some of the most revered individuals in the history of enlightened thought, whether historical figures such as Jesus of Nazareth and Socrates, or those who changed history in our own time such as Mahatma Gandhi, Martin Luther King or Nelson Mandela, have been accused and condemned under the law.

For subjects that are torn between obeying unjust laws and following their conscience, for those who encounter dehumanising and death-dealing legislations and institutions, dissent is an absolute calling that comes from the inner most sanctum of the spirit. When the state mobilises unjust laws to condemn the innocent, disobedience becomes an absolute responsibility that transcend all manners of private calculations.

Finally, if we look beyond the surreptitious violence of adjudication; if we attend to that which escapes the innocence of courts and their symbolic personification of power; we will discern the promise of a transformative renewal made possible by these renegade claims.

Wednesday, 14 May 2014

It is almost a month since members of the Nigerian
terrorist group Boko Haram burst into a girls’ school in the northeast of the
country and kidnapped hundreds of girls. It took at least two weeks before
international attention turned to the crisis, and even longer for the Nigerian
government to sharpen its response and accept help rescuing the girls. The abductions have triggered a worldwide social media campaign under the Twitter hashtag #BringBackOurGirls, and prompted the Unites States, Britain, France and Israel to offer help or send experts to Nigeria.

Boko Haram is a group and militant organization based in the northeast of Nigeria, north Cameroon and Niger. The Organization seeks to establish a ''pure'' Islamic state ruled by sharia-Law, putting a stop to what it deems ''Westernization''. The term ''Boko Haram'' comes from the Hausa word ''boko'', originally derived from a Hausa word with meanings such as ''fraud'' and ''inauthenticity'' and the Arabic word ''haram'' figuratively meaning ''sin''. Loosely translated, the term ''boko haram'' could mean ''Western education is sinful'', which would symbolize its strong opposition to anything Western, which it sees as corrupting Muslims.

Contrary to the general perception that Nigeria resisted initial outside help in its fight against ''Boko Haram'', recent report from ABC News shows how Nigeria, through the National Security Adviser, Sambo Dasuki, requested from the United States, Intelligence information and military gear to fight ''Boko Haram'' since last year. The report disclosed that the Nigerian government last year hired a powerful Washington lobbying firm to press its case for intelligence on the violent terror group and to persuade the Obama's administration to donate non-lethal equipment in the hunt for extremists.However, two months before ''Boko Haram'' was designated a foreign terrorist organization (FTO) by the U.S. in November 2013, Nigeria's Office of the National Security Adviser signed a $3 million-a year contract with K Street Firm Patton Boggs to provide comprehensive security advice, including the donation of excess military and law enforcement equipment, according to documents filed with the U.S. Justice Department under the Foreign Agents Registration Act. Until the recent abductions, the U.S. declined to share vital intelligence information with Nigeria's government, nor provided any military assistance whatsoever to Nigeria's government.Powerless to take on ''Boko Haram'', the Nigerian President Jonathan established a committee to open direct negotiations with the terrorist group, last year, after the U.S, failed to provide the help requested, which infuriated the Obama's administration, arguing that the U.S. would not assist the Nigeria's government if it opens direct talks with a ''terrorist organization''. That committee's initial six month mandate expired without holding direct talks with the terrorist organization, though it has spoken to ''Boko Haram'' leadership though proxies.While the Nigeria's government is divided rather to negotiate with ''Boko Haram'' or not, the U.S., Britain , France and Israel warn the Nigeria's government against such action, which subsequently prompted some Nigerian politicians to question why the U.S. and other foreign countries would be interested in helping the Nigeria's government now after failing to do so since 2013.
It is only now, after the abductions that the U.S. has
sent military, law-enforcement and development specialists to assist Nigeria government
against Boko Haram. Two U.S. officials said on Tuesday a mix of manned and
unmanned American surveillance aircraft were being used to aid the search for
the missing girls. One U.S. official identified the drone as a Global Hawk,
which is a high-altitude, unmanned spy plane manufactured by Northrop Grumman
Corp.

For the Nigeria Opposition, the calls for the United States to get involved in this
crisis undermines the democratic process in Nigeria and co-opts the growing
movement against the inept and kleptocratic Jonathan administration. It was
Nigerians who took their good for nothing President to task and challenged him
to address the plight of the missing girls. It is in their hands to seek
justice for these girls and to ensure that the Nigerian government is held
accountable. The U.S. assistance/action will do more harm to the people and will
only expands and sustain U.S. military might.

The last time U.S. military advisors were sent to Africa, they didn’t do much
good. Remember #KONY2012? When President Obama sent 100 combat-equipped troops
to capture or kill Lord’s Resistance Army leader Joseph Kony in Central Africa?
Well, they haven’t found him and although they momentarily stopped looking,
President Obama sent more troops in March 2014 who now roam Uganda, Central
African Republic, South Sudan, and the Democratic Republic of Congo.

AFRICOM (United States Africa Command), the military body that is
responsible for overseeing US military operations across Africa, gained much
from #KONY2012 and will now gain even more from #BringBackOurGirls. In 2013 alone, AFRICOM carried out a total of 546 “military activities”,
which is an average of one and half military missions a day. While we don’t
know much about the purpose of these activities, keep in mind that AFRICOM’s
mission is to “advance U.S. national security interests.”

And advancing they are. According to one report, in 2013, American troops
entered and advanced American interests in Niger, Uganda, Ghana, Malawi,
Burundi, Mauritania, South Africa, Chad, Togo, Cameroon, São Tomé and Príncipe,
Sierra Leone, Guinea, Lesotho, Ethiopia, Tanzania, and South Sudan.

The U.S. military conducted 128 separate “military activities” in 28 African
countries between June and December of 2013. These are in conjunction to U.S.
led drone operations which are occurring in Northern Nigeria and Somalia. There
are also counter-terrorism outposts in Djibouti and Niger and covert bases in Ethiopia
and the Seychelles which are serving as launching pads for the U.S. military to
carry out surveillance and armed drone strikes.

Although most of these activities are covert, we do know that the U.S.
military has had a destabilizing effect in a few countries. For example, a New
York Times article confirmed that the man who overthrew the elected Malian
government in 2012 was trained and mentored by the United States between 2004
and 2010. Further, a U.S. trained battalion in the Democratic Republic of Congo
was denounced by the United Nations for committing mass rapes. Knowing this, the involvement of the U.S. government and military will only lead
to more militarism, less oversight, and less democracy. It gives the U.S. military the legitimacy to encroach and
grow its military presence in Africa.

The best way to address this issue would be a direct negotiation between the Nigerian government and Boko Haram, because the crisis in not just religious, it is also ethnic and political. The growing frequency and geographical range of attacks attributed to ''Boko Haram'' have led some political and religious leaders in the north of Nigeria to the conclusion that the group has now expanded beyond its original religious composition to include not only Islamic militants, but criminal elements and disgruntled politicians as well. The proposed state of emergency and foreign assistance
will harm Nigeria’s government counter-insurgency strategy and will cause more
harm to people of Nigeria.

This school of thinking is shared by many African leaders,
who are become increasingly sceptical of the U.S. and others foreign assistance in
Africa. They argue that foreign countries only intervene in African affairs
when their interests are at stake and they are not accountable for the loss of
African lives in the process.

Tuesday, 13 May 2014

Like the rest of the world, Africa witnessed from afar Crimea annexation to
Russia and still follows from afar the new developments of Russian Speakers
eastern Ukrainians taking a leap forward to self-rule, possibly, another annexation
to Russia. With Crimea annexation and others eastern Ukrainian regions warming
up to the idea of being under Russia's control, Russian President Vladimir
Putin has implied that Russia is the rightful owner of all territories where Russian
speakers reside.

The Ukrainian citizenship of Russian speakers is dismissed by Russia as
secondary to their ethnic origin. They are Russian first, Ukrainian by
accident, Moscow’s story line states. Russian speakers were/are then said to be
in danger, firstly from discrimination and then physically. This was the
pretext for Russian military movements into Crimea. Ironically this seems to be
the main reason behind last Sunday's independence referendum in others eastern
Ukrainian regions.

While the international community led by the US would not recognise the Ukrainians
pro-Russia Separatists referendum, African’s reactions are muted. No African
nation wishes to put forth an opinion, much less a condemnation. What most
impressed African leaders, who are power pragmatists and judge all territorial
developments, not on the basis of morality, but on results at the end of the
day, is that Putin’s land grab is working.

They have learned that the process of annexing territory calls for a
combination of adroit propaganda and military might. Both are put in the
service of aggression founded on the pretext that a group of people who are of
the aggressor’s own ethnicity are imperilled within a coveted territory. Once
this premise is established, evidence of the people’s danger is manufactured by
a full-scale media assault while, quickly, troops are moved into place. The
military personnel and weaponry’s placement can then ensure a ‘’fait
accompli’’.

There is nothing stopping African despots with territorial ambitions from
studying Putin’s playbook to see if they too may grab land as successfully.
Africa has always been a tremulous patchwork of illogical national boundaries,
simmering ethnic hatreds that sometimes rise to genocide, national resources
coveted by neighbours and authoritarian leaders whose imperialistic desires
could be met if only they could find a way to get away with land grabs.

In contrast of what's happening in eastern Ukraine, history has taught us
that African land grabs process is successfully done by way of domestic
genocide and the vulnerability of neighbours. The danger of regions taken over
by powerful neighbours was on display in Central and East Africa in early 2014,
and exists in lesser and incipient movements elsewhere. These developments are
not new and have been a part of Africa’s post-colonial history.

This excuse has been favoured by authoritarian governments throughout Africa
as their reason ‘’du jour’’ after the collapse of the Soviet Union
retired the long-running excuse for foreign aggression and domestic oppression
in the name of “battling Communism.”

Idi Amin’s military incursion into Tanzania in 1977-78 was a land grab. The
original pretext for the invasion into the Kagera region of Tanzania was to
pursue anti-Amin army forces that had taken refuge there. However, Amin
proceeded to annex Kagera, claiming that the land had always belonged to
Uganda. The Africa continental body of the day, the Organisation for African
Unity (OAU), was a fragmented and militarily powerless entity compared to
today’s African Union (AU). It was up to Tanzania to mount a counter offense,
which led to the collapse of the Amin regime and his exile to Saudi Arabia.

Uganda’s impulse to annex by way of military action and expand its borders
into neighbouring regions continued in 2014. The pretext for Uganda’s attempt
at territorial expansion in South Sudan, its northern neighbour, is ‘security’
against ‘terrorists’.

Uganda’s president since 1991, Yoweri Museveni, had a role in Amin’s
overthrow but evidently learned from Amin lessons on cross-border incursions.
Days after South Sudan’s capital Juba was shaken by factional fighting in
December 2013, Ugandan troops moved northward into the country, ostensibly to
protect Ugandan citizens there. However, the troops remained after the Ugandans
were evacuated, and the occupation further destabilised the young country.
Peace talks stalled as the rebel groups made withdrawal of Ugandan soldiers
conditional to discussion of any treaty.

Rwanda’s genocide was based on a desire for territory. A populous country
where tensions between the Tutsi and Hutu tribes centred on the joint sharing
of a single place, ethnic cleansing was seen as the answer by Rwanda’s Hutu-led
government in 1994. The ethnic cleansing playbook was followed.

First, people of the Tutsi tribe were demonised in the propaganda of
government its co-conspirators. Marginalisation and discrimination of Tutsi
followed, and then their forced removal from homes and businesses. Then the
actual killing began, and an estimated 800,000 Tutsi’s were massacred.

No ethnic considerations were used as an excuse by foreign powers to invade
the Democratic Republic of Congo (DRC). DRC
land was sought by Rwanda and Uganda so mineral resources might be looted.
Rwanda’s aggressiveness turned external following the genocide. Rwanda’s
financing of rebel groups in DRC was done not to destabilise a country on
ethnic grounds as part of an overt annexation, but rather to destabilise the
DRC to achieve an invisible annexation, for economic benefits.

According to a June 2013 UN investigation, anti-government M-23 rebels
received support from both Rwanda and Uganda who, in turn, were able to access
the DRC's mineral wealth through illicit means. More than 20 million of
Congolese lost their lives in 20 years of civil war in eastern DRC by Rwanda
and Uganda invasion.

Carving ethnic enclaves out of sovereign nations has been a form of
territorial acquisition found whenever there is a civil war in Africa. All the
self-declared ‘break away regions’ and ‘autonomous homelands’ are attempts by
niche populations to replace democracy, where a country’s peoples work toward a
common cause while safeguarding the rights of minority groups, with autocratic
enclaves that serve one group while excluding others.

The Séléka militant group overthrew the government of the Central African
Republic (CAR) on 24 March 2013, to create an Islamist state. Séléka’s
atrocities were so widespread prior to their ouster from the capital Bangui in
February 2014 that a subsequent anti-Muslim backlash created its own
atrocities. African and European peacekeepers were positioned with a mandate to
ensure the country is not ethnically torn asunder.

In Nigeria, the jihadist group Boko Haram seeks to overthrow government and
create an Islamist state, where citizenship would be based on ethnicity and
religion. The jihadist group occupies a part of Nigeria land where it is
keeping the 100 girls it kidnapped.

Zimbabwe’s autocratic president Robert Mugabe’s ethnic cleansing of his
country of white farmers and businessmen occurred 30 years later, when a less
jaundiced international community responded by imposing sanctions because of
the property seizures and other political and human rights violations.

Mugabe’s political cronies now occupy, but do not make productive use of
confiscated properties. State propaganda demonised white Zimbabwean’s, whose
lack of popularity amongst Zimbabwean’s of other races made their victimisation
a populist triumph for government, the way Hitler’s seizure of Jewish property
was achieved by exploiting German’s emotions and prejudices.

Hitler committed genocide, and while the murders of white farm owners in
Zimbabwe and post-apartheid Africa were a trend in the 1990s and 2000s, with
state-sponsored thugs implicated in Zimbabwe, fears of genocide did not become
reality. However, seizure of territory (massive amounts of farmland and
businesses) by playing the race card did succeed, and racist demagoguery is
still as common in Africa as homophobia.

South Africa’s former African National Congress (ANC) Youth Leader Julius
Malema exemplifies this in his habitual advocacy of shooting “Boers” which he
sings at rallies of his supporters. Political demagoguery founded on ethnic or
racial hatred is a form of aggression. In South Africa hate speech is actively
prosecuted. Enlightened Africans recognise that such demagoguery is the first
step toward conflict, land grabs and genocide.

The conclusion drawn from Russia’s take-over of Crimea and now pushing to
establish Russia’s control over eastern Ukraine regions, through Ukrainians
pro-Russia Separatists, by Africa’s aggressors, from warlords to national
dictators, is that ‘might makes right.’ Aided by a state-run propaganda
apparatus and enforced by superior military force, an aggressive act done in
the name of nationalism or ethnic pride is a certain short-term domestic
success.

A disapproving international community may be again powerless to stop (or as
often in the case of Africa, uninterested in stopping) the aggression, while at
home the popularity of the country’s leadership will soar. As for long-term
complications, such as harm to a national economy from sanctions, African
leaders feel that Russia’s situation is much like their own. Like the proud
Russians, Africans have long-held grievances and decades of poverty inoculating
them against any inconveniences or economic setbacks that sanctions might
bring.

When Russia annexed Crimea, the country resounded with nationalistic pride;
the type of consequences-be-damned pro-war hysteria that commonly enthuses
people at the start of conflicts. The country may suffer in the long term
because of Western counter-measures, but Putin’s policies are intended to be
generational, methodically expanding the Russian Orthodox Empire in a push that
absorbs temporary setbacks, such as market declines and currency devaluations,
to achieve a Russian-speaking hegemony over Eurasia that, unlike Hitler’s
Reich, would be intended to last a much longer than 1,000 years.

African leaders also follow similar generation timelines, and like their
conservative, tribally and ethnically-centred peoples are motivated by
centuries-old memories. Museveni’s championing human rights abuses in Uganda
was a calculated political move, and considerations of consequences beyond
immediately-achieved objectives were of no interest to him.

Museveni and Putin
were voicing identical sentiments at the very same time when they condemned the
‘decadent West’ and claimed for themselves ultimate moral authority – a
morality that allows for the persecution of all people considered ‘others’ by
the politicians’ political base.

Russia’s successful annexation of a portion of a neighbouring country has
raised the likelihood of similar land grabs in Africa. As soon as an
opportunity arises, land grabs will be made by African leaderships remembering
Putin in Crimea, not Saddam Hussein in Kuwait.

Monday, 12 May 2014

On Sunday 11 May, the voters in eastern Ukraine voted in an unofficial referendum on independence. The vote was an act of defiance. On Monday pro-Russian Separatists declared a resounding victory in a Separatists referendum on self-rule in eastern Ukraine regions. Hours after the vote, dismissed by Kiev and Western governments and U.S. as illegal, Separatists leaders' plans remained unclear. Some have publicly supported pressing for annexation by Russia, which absorbed Crimea after a similar vote in March.

Ukrainian leader Oleksander Turchinov accused Russia of working to overthrow legitimate state power in Ukraine after Russia said it respected the outcome of the referendum, in which separatists in the industrial Donetsk region claimed 90 percent support, and that the results should be implemented peacefully. It did not say what further action it might take.

The European Union and U.S. declared the referendum illegal, bogus and prepared to increase pressure on Russia on Monday by taking a first step towards extending sanctions to companies, as well as people, linked to Moscow's annexation of Crimea from Ukraine. The E.U. and U.S. believe that the referendum will create even more problems in the effort to de-escalate the situation.

The referendum opened a new phase of uncertainty in a country historically divided between a Russian-speaking east and a more westward looking west. The authorities are wary of the danger of clashes between security forces and crowds that could stir wider bloodshed.

Drawing comparisons with referendums held in a number of other states, considering the democratic credentials of the vote, it can be argued that the referendum now represents the majority attempting to impose its views on the minority, and that vote on eastern Ukraine’s future should only have taken place once there had been a negotiated settlement among all parties in the region.

What are the consequences of the referendum? Was it legal or Was it unconstitutional? Was that referendum ''bogus''? Was Putin's suggestion that the vote should be postponed as he did on Wednesday ''an irony''? Categorical answers are rare in politics, law and international affairs. This article tends to outline some of the consequences and the legal situation pertaining to the referendum and provides a dispassionate analysis of the situation.

Was the referendum bogus? If by ‘bogus’ the E.U. and U.S. mean illegal, it is not difficult to answer the question in the affirmative. The referendum was undoubtedly unconstitutional. Article 73 of the Ukrainian Constitution of 1992 is unequivocally clear. It states that “issues of altering the territory of Ukraine are [to be] resolved exclusively by an all-Ukrainian referendum”. As the vote was only held in the eastern part of the country, the vote was ipso facto unconstitutional.

Of course, the separatists claim that they have a ‘legal right’ to hold a referendum. This is not a reading that can be supported by either international or national law. The right to self-determination does not give a minority a ‘right’ to independence in legal terms.

To be sure, occupied territories (such as East Timor and Western Sahara )won support for referendums on self-determination from the International Court of Justice. But these advisory opinions are not legally binding in the strict sense and nor are they relevant to the present case. For unlike Western Sahara and East Timor, eastern Ukraine is not a territory that has been invaded by a foreign state. Eastern Ukraine was already part of the country.

Further, the two advisory opinions do not say anything about unilateral secession. Given the blanket-ban in the Ukrainian constitution and the lack of clear guidelines in international law, it is fair to say that the referendum in eastern Ukraine was illegal and not consistent with the principle of pravovoe gosudarstvo ­– roughly translated ‘the rule of law’.

Referendums may appear democratic. But no democracy can function in the long run if it becomes a tyranny of the majority. Like First-Past-the-Post electoral systems, the winner-takes-it-all in a referendum.

As we saw in referendums in Croatia in 1991 and in Bosnia in 1992, referendums held without prior negotiations between the parties exacerbate conflicts and force the losers to embrace political violence. For example, in Bosnia the Serb minority had no other option than to resort to violence when they were defeated at the polls in a vote they could never win for demographic reasons.

Democracy and majority rule may be good guiding principles in theory; in practice they only work if there is a modicum of respect for minorities.

The referendum can be a mechanism that consolidates a peaceful settlement. A plebiscite can provide the seal of approval to a negotiated settlement. This was famously the case in Northern Ireland in 1998 when a massive 73 per cent endorsement by the voters in the referendum on the Good Friday Agreement facilitated the end of ‘the troubles’. The same was true in Burundi in 2005, where a negotiated settlement on power-sharing between Hutus and Tutsis was endorsed by a referendum.

But the referendum must only be held after a compromise is reached. Anything other than that is likely to result in strife and in many cases entrenched civil war. Granted, all-out war is less likely in eastern Ukraine than in Croatia or in Bosnia, but a referendum is unlikely to be conducive to constructive negotiations. The E.U. and U.S. are undoubtedly right that the referendum will create even more problems in the effort to de-escalate the situation.

Photo-Credit: AFP-photo- Members of a local election commission in eastern-Ukraine sort ballots as they start counting votes of yesterday's referendum on the status of Luhansk region in Luhansk May 11, 2014.

Friday, 9 May 2014

As Egypt lurches toward presidential elections late this month, its growing dependence on the Gulf Cooperation Council (GCC) is seen increasingly as a challenge for any incoming Egyptian government.

Much of the commentary has been alarming, warning that Egypt’s reliance on emergency inflows from the GCC—especially Saudi Arabia, the United Arab Emirates (UAE), and Kuwait—comes with a corresponding loss of autonomy.

This aid seems to be contingent on the Egyptian government further suppressing the Muslim Brotherhood, and it restricts Egypt's ability to pursue an independent foreign policy. But while Gulf economic lifelines come with political costs, they also present opportunities. Egypt is now well placed to reengage on favorable terms with a more diverse group of international creditors, the International Monetary Fund (IMF) in particular.

Following the military-backed coup last July, the IMF could not have been more irrelevant in Egypt. Saudi Arabia, Kuwait, and the UAE had pledged $12 billion in economic assistance, staving off an immediate crisis. The inflows stabilized Egypt’s diminishing foreign currency reserves, cushioned its widening current account deficit, and for a time strengthened the country’s social equilibrium by allowing the government to pay for crucial subsidies. The initial $12 billion has since been bolstered by an additional $5.8 billion, again pledged by Saudi Arabia and the UAE at the end of January 2014.

From the standpoint of investors and financial markets, all of this has instilled confidence in Egypt. Egyptian stocks rallied by over 40 percent in the second half of 2013, and the country’s foreign reserves reached $17.4 billion by the end of last month—approaching an all-time high level of foreign reserves in Egypt in the three years since the uprisings of 2011, nearing the $18.9 billion reached in August 2013. However, the underlying economic effect on Egypt from GCC inflows has been mixed.

The Egyptian pound has barely appreciated, and at around 11 percent inflation is manageable but remains a concern. And despite a limited stimulus program initiated by the government of former prime minister Hazem Beblawi, unemployment continues in Egypt between 13 and 25 percent. By no means has GCC assistance turned Egypt around or done much beyond allowing the government to secure desperately-needed breathing room.

Continued GCC assistance to Egypt is also far from certain. Each of the GCC states that stepped in following June 30 has its own pressing domestic needs that require a widening of government outlays. This is particularly the case for Saudi Arabia, which in 2011 sought to preempt popular protests in the country through a massive increase in its public sector, a series of pay raises, new housing projects, and major infrastructure initiatives.

Alongside these increasing expenditures, global oil prices remain weak and, as a result, net oil exporters have begun eating into their surpluses. A sustained period of cheap global energy further endangers the fiscal position of leading GCC countries, and without robust private sector growth in the near term, the Gulf could face a jobs gap of 1 million by 2016. These are serious economic and still unresolved social pressures that could lead them to shut off the tap or change the terms of their loan agreements to Egypt.

Then there is the political dimension of Egypt’s dependence on the GCC. On one hand, soon after July 3, the new government in Cairo abruptly pivoted from the Muslim Brotherhood’s earlier support for the Syrian rebels. Egyptian policy shifted once again after the government received its first installment of GCC inflows, and the military-backed government quietly fell in line with Saudi leadership on opposition to the Assad regime.

On the other hand, GCC and specifically Saudi interactions with Egypt have never resembled a smooth patron-client relationship. It remains to be seen whether or not a Sisi-led government will remain compliant with Saudi and GCC priorities following elections in Egypt.

So long as it remains the beneficiary of GCC largesse, however, Egypt is in its most strategic position since early 2011 to reengage with other international creditors—starting with the IMF. Despite the gravity of human rights abuses and the ongoing repression of civil society, in the case of the IMF, although not an overtly political institution, its actions reflect the imperatives of its leading member states and the economic policymakers charged with managing relief to sovereign debtors.

The IMF, in remaining “strongly committed” to Egypt, seems to have bought into the “restoration of democracy” narrative and it anticipates a return to stability following presidential elections.

There is also historic precedent for dealing with Egypt regardless of its domestic political climate. The IMF dealt with former president Hosni Mubarak as compensation for Egyptian support for coalition forces during the First Gulf War, whose government by then had a less than optimal record on human rights, civil governance, and transparency.

The geopolitical reasons for reengaging with Egypt today are equally profound. Despite public censure, western actors—notably the United States and European Union—by and large need Egypt to maintain pressure on armed Islamist groups in the Sinai and to remain a buffer against the larger destabilization of the region caused by the prolonged conflict in Syria. Western actors also want Egypt to not seek rival sponsors, such as Russia, whose recent arms agreement with Egypt buttresses speculation that Cairo is moving away from Washington.

Egypt could leverage these political circumstances to extract more favorable conditions from the IMF. The IMF’s own commitment to austerity is arguably more nuanced today than it has ever been previously, as when the IMF offered Egypt a $372 million loan agreement in 1991, which included harsh austerity conditions.

Following the most recent Eurozone crisis, the IMF position on austerity seems to have evolved—IMF leaders have been critical of austerity in certain EU economies, especially in the UK, and appreciate the explosiveness of the subsidy issue in Egypt. This would mean that Egypt could potentially secure an IMF loan without an immediate and drastic scaling back of subsidies that would further pressurize the domestic political climate.

For the moment, it is unclear whether a Sisi-led government would accept renewed terms from the IMF. Western commentators, for their part, have made mostly undocumented assertions that Abdel Fattah el-Sisi favors an increased role for the army in the economy and a return to statist policies pursued by Nasser in the 1950s.

This would suggest a turn away from the IMF and other western creditors. Still, an expansion of the military's prerogatives and continued private sector growth—fueled by the IMF—are not mutually exclusive, as the IMF’s role in Egypt in the early 1990s shows. If anything, market reforms following the IMF intervention in the early 1990s allowed the military to penetrate the private sector in ways that would not have been possible previously—largely by assuming direct ownership of companies, filling advisory boards, and dictating government contracts.

Egyptian and Arab sources also present a more complicated portrait of the current government’s early economic track record, including efforts to encourage a return of foreign direct investment (FDI). The government is already working with blue chip Asian companies such as Samsung—which opened its first factory in the Middle East at Beni Suef last September—and is presiding over major financial sector activity that involves a number of potentially large public offerings on the Egyptian exchange in the coming months.

Even though Beblawi is gone, there are still well-known technocrats in the government who understand the importance of good international credit to private sector growth, including Ibrahim Mahlab, Nabil Fahmy, and Hisham Zazou. These officials are well placed to make the case for the IMF to Sisi, especially if he is intent on reasserting Egyptian influence in the wider region. This would require a break away from Egypt's singular economic dependence on the GCC.

Given the weaknesses underlying continued dependence on the GCC and the government’s early approach to FDI, Sisi would do well to test the waters of renewed IMF negotiations. Even if the talks fell through, a dialogue would be confidence-inducing and—for better or worse—would shore up international credibility for the new regime.

If the current military leadership does indeed harbor Nasserist ambitions, they cannot remain pawns of the Gulf indefinitely and will need a clear road to economic recovery. The IMF provides one such possible path.

Thursday, 8 May 2014

The German export lobby, the British finance lobby and the French energy lobby hinder problem solving in the EU. The continent has only one chance: the subordination of these interests.

Three major structural problems are affecting Europe: The polarization of regional competitiveness, the inability to push towards a restructuring of the finance industry and the reluctance to promote energy transition. The German export industry, the British financial sector and French energy companies are jeopardizing suitable reform projects. European solutions are needed to offer alternatives to these national interests.

The current economic misery is a political disaster because it is the result of a bad reaction to the crisis. It is therefore self-inflicted. Particularly delicate is the fact that the downturn could quite easily be answered with a Europe-wide public investment wave.

Besides these cyclical problems, Europe is facing some profound structural challenges that cannot be managed with a stimulus package but that require the reorganization of entire sectors. Such solutions would oppose the alleged national interests of Europe’s biggest member states. The most powerful European lobbies, that is to say, the German export lobby, the British financial lobby and the French energy lobby, will cause the needed resolutions to fail.

The German export lobby

Instead of focusing on the entire Union’s long-term prosperity, Germany is devoted to securing short-term national success from foreign trade. Due to regional competitiveness, intensively promoted by Germany, its economy grows more slowly than, for example, the economy of the United States.

In comparison to the general stagnation of the EU, to which Germany has contributed substantially, Germany remains quite successful economically speaking. However, the nation’s wage level does not reflect its high productivity. Germany’s trade partners are suffering from this gap in two ways: First, because German demand is disproportionately low, and second, because German products are too cheap in relation to their quality. It is therefore unsurprising that Germany has managed to accumulate a trade surplus almost every year since 1993.

Whatever one may criticize about Germany, its abundance in human as well as physical capital is not only real but underrated. A return to the German mark would probably result in a revaluation of at least 20 percent against the U.S. dollar – also a good benchmark for showing how much lower the wages are in Germany. The strength of the industry within the Germany economy (15 of the 30 biggest companies are manufacturers) is responsible for a relatively influential export lobby which has already become part of the national identity. This export lobby tries its best to delay the overall devaluation of German goods’ prices.

The British finance lobby

The United Kingdom is doing all it can to save an economic model that is built on sand. After a drastic deindustrialization following the Thatcher years, Great Britain acquired the status of being the bank of the world. Its wealth only exists on paper and has little to do with the country’s real human and physical capital.

Only 10 of the 30 biggest British companies are industrial manufacturers, but all of them are financial giants. Great Britain has been holding a trade deficit since 1998 (they import more than they export), which indicates that the country systematically consumes more than it is able to produce. Still, it is fighting off all limitations to the financial sector, just because the City of London – the unquestioned political epicenter of power – is unwilling to question the country’s unsustainable economic model. Prime Minister Cameron stated two years ago that he would not support a financial transaction tax.

The French energy lobby

A relatively small number of innovative small- to medium-size companies and the dominance of a few big businesses are often seen as the core structural problems of France’s economy. Amongst the latter, energy companies figure particularly prominently: Four of the 30 biggest European companies are energy enterprises, three of them in the French top 10. Since they are all specialized in nuclear energy, they deliver 75 percent of all the nuclear power that Europe is using. Électricité de France, the second biggest electricity generator in the world, is de facto state owned.

Furthermore, France commands an industrial plant manufacturing site that is directly linked to a nuclear power generator. Areva, one of France’s top 50 companies, specializes in manufacturing civil and military atomic reactors and is state owned as well. The country itself hence becomes the lobby for its biggest industry. France embodies the biggest obstacle to a European energy revolution and a farewell to nuclear energy.

Economic consensus for Europe

An economic regime change would probably be most painful for Great Britain. New industries would have to be built overnight, an enormous effort which has been overdue ever since the 1980s. For France, a nation that has not been focusing on renewable energy so far, the adjustment would likewise be of a substantial degree. It would require a complete realignment. Germany, on the other hand, would probably have to show the smallest effort to adjust itself. Its primary task would be to accept that an export (vice-)champion should also be an import (vice-)champion. All it would have to do is spend the wealth that it is generating in real terms.

Small disadvantages regarding price competitiveness – something that is of little relevance to Germany’s export success – would be more than compensated by strong impulses on domestic demand. The industry’s share of the GDP would probably decrease a little in favor of the service industries. Instead of focusing on the demand of emerging countries, the German economic structure would focus more on its own national demand.

Unfortunately, all three lobbies have managed to establish their respective economic sectors as national shrines in the public awareness of their countries – protected through politics and conjured as myths. This leaves the three main structural economic questions of our time unanswered. It seems that the only chance is the development of a European authority that is strong enough to subordinate these national interests.

Wednesday, 7 May 2014

The last two decades have been good for many African economies. The pace of economic growth has increased, while the number of conflicts has decreased and technological advances have provided new opportunities for African producers. What this will mean for the future remains uncertain.

The continent has seen growth spurts before – spurts which have often been followed by stagnation or reversal. Have African countries turned a corner? Is this time different? These are not easy questions to answer. Whether African countries are now on a path to success depends on how we define the conditions for sustained (vs temporary) economic growth.

We can do this by looking to other countries that have made this transition successfully, and comparing them to African countries today. But which countries provide the right comparison?

Development policies have often been based on the experiences of rich countries in Europe and North America from the nineteenth century. However, the research shows that these countries were already substantially wealthier than African countries today, and therefore such comparisons may set unrealistic standards.

Another option has been to compare African economies with other parts of the developing world. The popularity of such “South-South” comparisons has increased in recent years, as academics and policy-makers have attempted to find an alternative to development paradigms based on the experience of western countries. However, it remains unclear whether many Asian economies have made the transition themselves.

To avoid this problem, let's draw on the experience of European countries before they made the transition to sustained growth. Using new data on Europe’s economic history from the period long before industrialisation, we can identify the conditions necessary for sustained growth. Estimates of GDP per capita for four European countries dating back to the 1200s provide critical levels of income, which we then apply to African countries in the post-war period.

This comparison yields two key insights into the economic performance of pre-industrial economies, which challenge existing preconceptions. The first is that levels of per capita income in pre-industrial economies were well above subsistence. The second is that periods of economic growth were commonplace, but any improvements in per capita incomes were erased by periods of negative growth. These “growth reversals” were linked to a number of causes, from changing external markets for exports to internal conflict and climatic shocks.

Achieving sustained improvements in living standards over the long run required institutional change which allowed people to specialise and move out of agriculture and into manufacturing and services. This happened first in the North Sea Area economies (England and the Netherlands).

The institutional changes needed had two aspects. One was the expansion of state capacity, which allowed for investments in infrastructure and the integration of domestic markets. It also allowed for the first provision of a public safety net – in England, under the Poor Laws enacted from the sixteenth century. At the same time, institutions constraining the predatory behaviour of the state and ensuring the security of property rights incentivised investment. In Europe this took the form of increasing Parliamentary control over state resources and policies.

What might this mean for African countries today? Recent studies of African economic performance have used the duration and speed of economic growth over the past two decades to assess whether the current boom meets the threshold for sustained growth. Recent Studies suggest that other variables may be more important, particularly indicators of structural change and institutional quality.

Looking at these data gives a varied picture across the continent. Some of Africa’s fastest-growing economies are mineral producers ( for example Democratic Republic of Congo) with booming markets for their exports in Asia and Latin America. These economies, however, often score relatively poorly in terms of their level of structural change and institutional quality.

On the other hand, poorer countries which have focused on building good institutions and encouraging structural change often score better ( for example Rwanda). The research uses the European experience to provide a new framework through which to assess the likelihood that individual countries have made the transition to sustained growth.

This approach can be contrasted with that of the structural adjustment programmes of the 1980s. The premise behind the policy recommendations of international financial institutions in this period was based on the experiences of European countries after they had made the transition to sustained growth. They therefore included, for example, the scaling back of state capacity, which came at a heavy cost in terms of living standards in many African countries as state provision of health care and education was cut back.

Comparison with pre-industrial Europe suggests two conclusions for African countries today. History shows that the pattern of growth and reversal which has characterised African economic performance in the post-war period can persist for centuries.

If the current boom is to be different, African countries must develop institutions which allow people to specialise away from agriculture, and mitigate the impact of market failures. If countries harness current growth to make these changes, they may succeed in making the transition to sustained growth.